Targeted Support: The New Advice Framework for Pensions and Investments

The Financial Conduct Authority's targeted support regime represents a fundamental shift in how pension providers and investment firms can engage with consumers who currently fall outside the traditional advice market. Taking effect on 6 April 2026, this new framework creates a regulated middle ground between generic guidance and full regulated advice, with the potential to transform outcomes for millions of UK consumers.

In this article, we examine what targeted support means in practice, how it differs from existing regulatory frameworks, the authorisation requirements firms must meet, and practical steps for implementation.

The Advice Gap: Why Targeted Support Matters

The UK faces a persistent advice gap. An estimated 18 million consumers hold pension and investment assets but do not access regulated financial advice. Many find themselves unable or unwilling to pay for full advice services, yet require more than generic guidance to make informed decisions about their financial futures.

This gap has significant consequences. Consumers approaching retirement may leave pension pots invested inappropriately for their circumstances. Others may fail to consolidate small pension pots, missing out on potential benefits. Some hold cash in workplace pensions when equity investment might better serve their long-term objectives. Without appropriate support, these consumers risk poor outcomes through inaction or uninformed decision-making.

The FCA's targeted support regime, introduced through Policy Statement PS25/22, directly addresses this gap. By creating a new regulatory permission that allows firms to provide personalised support without the full requirements of regulated advice, the framework enables providers to help consumers who would otherwise receive no assistance at all.

What Is Targeted Support?

Targeted support is a new regulated activity that permits firms to make personalised suggestions to consumers based on information about their circumstances, without conducting a full suitability assessment as required for regulated advice.

The key distinction lies in the nature of the consumer interaction:

Regulated advice requires a comprehensive suitability assessment considering the consumer's entire financial position, resulting in a personal recommendation to buy, sell, or hold a specific investment.

Targeted support permits firms to make suggestions based on limited, targeted information relevant to a specific decision the consumer faces, without the obligation to consider their complete financial circumstances.

Guidance provides generic information about financial products and concepts without reference to the consumer's individual situation.

Targeted support occupies the middle ground. It acknowledges that consumers often need more than generic information to make good decisions, while recognising that full advice may not be proportionate or accessible for every situation.

The Regulatory Framework

The FCA has established detailed rules governing targeted support, with protections designed to ensure consumers benefit without being exposed to inappropriate harm.

Scope of Targeted Support

Targeted support may be provided in relation to:

Workplace pension schemes - including decisions about contribution levels, fund selection, and retirement options
Personal pensions - including drawdown decisions and fund switches
Stocks and shares ISAs - including fund selection and asset allocation
Other retail investment products - subject to specific limitations

Crucially, targeted support cannot be used for complex decisions where full advice remains appropriate. The FCA has identified certain scenarios, including advice on defined benefit pension transfers, as remaining outside the targeted support framework.

Consumer Protections

The framework incorporates robust consumer protections:

Clear disclosure - Consumers must be informed that targeted support is not the same as regulated advice and that they may wish to seek full advice for complex decisions
Appropriateness requirements - Firms must ensure any suggestions are appropriate for consumers with the characteristics identified through the targeted support process
Consumer Duty alignment - All targeted support must comply with Consumer Duty requirements, including delivering good outcomes and fair value
Complaints and redress - Consumers receiving targeted support have access to the Financial Ombudsman Service

Limitations on Targeted Support

The FCA has established clear boundaries on what targeted support may involve:

Targeted support cannot result in a personal recommendation as defined under MiFID
Firms cannot use targeted support to circumvent suitability requirements for complex products
Certain product categories remain subject to full advice requirements regardless
Suggestions must be based on disclosed, limited information rather than assumptions about consumer circumstances

How Targeted Support Differs From Regulated Advice

Understanding the distinction between targeted support and regulated advice is essential for both compliance and consumer outcomes.

Information Gathering

Regulated advice requires comprehensive fact-finding covering the consumer's complete financial position, objectives, risk tolerance, capacity for loss, and time horizon. Advisers must understand the consumer's total circumstances before making recommendations.

Targeted support permits suggestions based on limited, targeted information relevant to the specific decision at hand. For example, a workplace pension provider might ask only about a consumer's expected retirement date and current contribution level to suggest whether increasing contributions might be beneficial.

Suitability Assessment

Regulated advice demands a full suitability assessment demonstrating that any recommendation is suitable for the individual consumer considering all relevant circumstances.

Targeted support requires an appropriateness assessment confirming that the suggestion is appropriate for consumers with the characteristics disclosed, without requiring consideration of their complete financial position.

Regulatory Permissions

Regulated advice requires permissions to advise on investments under Article 53 of the Regulated Activities Order.

Targeted support requires a new, separate regulatory permission introduced specifically for this activity. Firms seeking to provide targeted support must apply to the FCA for this permission.

Documentation and Record-Keeping

Both activities require appropriate documentation, but the nature and extent differ:

Regulated advice requires detailed suitability reports and comprehensive records of the advice process.

Targeted support requires records of the targeted information gathered, the basis for any suggestions made, and the disclosures provided to consumers.

Authorisation Requirements

Firms wishing to provide targeted support must obtain specific regulatory permission from the FCA. The application process opened through the FCA's PASS (Permissions, Applications and Supervisory Support) service in March 2026.

Who Needs Permission?

The targeted support permission is required by:

Workplace pension providers wishing to provide personalised support to scheme members
Personal pension providers offering targeted support to customers
Investment platforms providing suggestions to retail investors
Any other firm providing targeted support as a regulated activity

Firms already authorised for regulated advice activities do not automatically receive targeted support permissions. A separate application or variation of permission is required.

The Application Process

Applications for targeted support permission must be submitted through the FCA's PASS portal. The FCA has indicated it will prioritise applications from firms with established compliance infrastructures and clear consumer benefit propositions.

Key elements of the application include:

Business model description - Clear explanation of how targeted support will be delivered, including the consumer journeys involved and the types of suggestions that may be made.

Systems and controls - Evidence of appropriate systems to gather targeted information, assess appropriateness, and deliver suggestions within regulatory requirements.

Compliance arrangements - Demonstration of adequate compliance monitoring for targeted support activities, including oversight of consumer outcomes.

Staff competence - Evidence that personnel involved in delivering targeted support have appropriate competence and qualifications.

Consumer Duty alignment - Explanation of how targeted support offerings will comply with Consumer Duty requirements, including value assessment and outcomes monitoring.

Timeline for Authorisation

The FCA opened the application gateway in March 2026, with rules taking effect from 6 April 2026. Firms should note:

Applications submitted before 6 April 2026 may be processed in time for implementation at commencement
The FCA has committed to prioritising straightforward applications from established firms
Complex applications or those from newly authorised firms may take longer to process
Firms cannot provide targeted support without the appropriate permission in place

Consumer Duty Implications

Targeted support exists within the broader Consumer Duty framework. Firms must ensure their targeted support offerings deliver good outcomes for consumers across all four Consumer Duty outcomes.

Products and Services

Targeted support offerings must be designed to meet genuine consumer needs. Firms should:

Identify clear target markets for targeted support services
Ensure suggestions align with the needs of consumers in those target markets
Monitor whether targeted support is delivering intended benefits
Take action where targeted support is not meeting consumer needs

Price and Value

While targeted support may be provided at lower cost than full advice, firms must still demonstrate fair value:

Fees charged for targeted support must be reasonable relative to benefits delivered
Cross-subsidisation between targeted support and other services must be transparent
Consumers must understand what they are paying for and what they receive

Consumer Understanding

Clear communication is essential for targeted support:

Consumers must understand that targeted support is not the same as regulated advice
Limitations of targeted support must be clearly disclosed
Suggestions must be communicated in a way consumers can understand and act upon
Consumers should know when they might benefit from seeking full advice instead

Consumer Support

Targeted support itself is a form of consumer support, but firms must also ensure:

Consumers can easily access targeted support services
Follow-up support is available where consumers have questions
Complaints about targeted support are handled appropriately
Vulnerable consumers receive appropriate additional support

Workplace Pension Provider Marketing Permissions

A significant aspect of the targeted support framework concerns marketing by workplace pension providers. Previously, providers faced restrictions on communicating directly with scheme members about options beyond their workplace scheme.

The new framework permits workplace pension providers, subject to appropriate permissions, to:

Communicate with members about the provider's own retail products
Highlight options available when members leave employment or approach retirement
Provide targeted support suggestions that may include the provider's own products

This change acknowledges that workplace pension providers often hold significant information about members and are well-placed to provide targeted support. However, firms must manage conflicts of interest carefully and ensure communications serve members' interests rather than merely promoting products.

Safeguards for Members

The FCA has implemented safeguards to prevent abuse of marketing permissions:

Communications must clearly distinguish between scheme-related information and marketing
Conflicts of interest must be disclosed and managed
Targeted support suggestions must be appropriate regardless of whether they involve the provider's own products
Members must be able to opt out of marketing communications

Implementation Considerations

Firms planning to offer targeted support should consider several practical factors.

Technology and Systems

Effective targeted support typically requires:

Digital platforms capable of gathering targeted information efficiently
Appropriateness assessment logic aligned with regulatory requirements
Disclosure and documentation systems meeting record-keeping obligations
Integration with existing customer management and compliance systems

Staff Training and Competence

Personnel involved in targeted support must understand:

The distinction between targeted support and regulated advice
When targeted support is appropriate and when full advice should be recommended
How to gather targeted information effectively
Disclosure requirements and consumer protection obligations

Compliance Monitoring

Firms should establish monitoring frameworks covering:

Quality of targeted support interactions
Appropriateness of suggestions made
Consumer outcomes from targeted support
Complaints and feedback analysis
Regulatory reporting requirements

Governance and Oversight

Senior management must ensure:

Clear accountability for targeted support activities
Regular reporting on targeted support outcomes
Escalation processes for concerns identified
Integration with broader Consumer Duty governance

Common Questions About Targeted Support

Can targeted support replace advice?

Targeted support is designed to complement, not replace, regulated advice. For complex decisions including defined benefit transfers, equity release, or comprehensive financial planning, full advice remains appropriate. Targeted support serves consumers who would otherwise receive no assistance at all.

What if a consumer needs full advice?

Firms must recognise when targeted support is not appropriate and signpost consumers to regulated advice. This includes situations where:

The decision is too complex for targeted support
The consumer's circumstances suggest they would benefit from full advice
The consumer requests advice rather than targeted support

How should firms price targeted support?

Pricing models vary. Some firms may offer targeted support without charge as part of their platform or pension administration services. Others may charge modest fees. All pricing must demonstrate fair value under Consumer Duty requirements.

What records must firms keep?

Firms must retain records of:

Targeted information gathered from consumers
Appropriateness assessments conducted
Suggestions made and their basis
Disclosures provided
Any complaints or feedback received

Looking Ahead

The targeted support regime represents an important evolution in UK financial services regulation. By creating a proportionate framework for personalised consumer engagement, the FCA aims to narrow the advice gap and improve outcomes for millions of consumers.

Success depends on firms implementing targeted support thoughtfully, with genuine focus on consumer benefit rather than commercial opportunity alone. The most effective targeted support propositions will combine appropriate technology, competent personnel, and robust compliance frameworks to deliver meaningful assistance to consumers who need it.

As the regime beds in, we anticipate the FCA will monitor outcomes closely and may refine requirements based on experience. Firms should maintain flexibility to adapt their approaches as regulatory expectations evolve.

How MEMA Can Help

Navigating the targeted support framework requires specialist regulatory expertise. At MEMA Consultants, we support firms across the pensions and investment sectors with implementing new regulatory requirements effectively and efficiently.

Our targeted support services include:

Regulatory Permission Applications We prepare comprehensive applications for targeted support permissions through the FCA's PASS service, including business model documentation, systems and controls evidence, and compliance framework descriptions.

Framework Design and Implementation We help firms design targeted support frameworks that meet regulatory requirements while delivering genuine consumer benefit, including consumer journey mapping, appropriateness logic development, and disclosure drafting.

Consumer Duty Alignment We ensure targeted support offerings comply with Consumer Duty requirements across all four outcomes, including value assessment and outcomes monitoring frameworks.

Compliance Monitoring Programmes We develop monitoring programmes specifically designed for targeted support activities, enabling firms to demonstrate ongoing compliance and identify areas for improvement.

Staff Training We deliver training programmes helping personnel understand targeted support requirements, distinguish from regulated advice, and deliver compliant consumer interactions.

Governance Support We assist boards and senior management with oversight frameworks for targeted support, including management information design and reporting templates.

Ready to discuss your targeted support implementation? Contact our team today for a confidential consultation. We will help you understand what targeted support means for your firm and develop a clear pathway to successful implementation.

This article provides general information about the FCA's targeted support framework and should not be relied upon as specific regulatory or legal advice. Requirements may vary based on individual firm circumstances, and the regulatory framework may evolve. For advice tailored to your situation, please contact MEMA Consultants directly.